French tyre manufacturer Michelin today posted a smaller-than-expected first half loss and said that although industry stocks were returning to more normal levels it was too soon to talk about an upturn.
The group said it was "committed" to generating positive free cash flow in the second half, after achieving €575 million in the first six months of the year.
It posted a net loss of €119 million in the first half, while the consensus of 11 analysts was for a loss of €255 million, against €430 million last year. Michelin said the loss was due to high restructuring costs.
"Concerning the business environment, inventories have now returned to more normal levels, but not to the extent that we can talk about a real upturn," chief executive Michel Rollier said a statement.
Mr Rollier said in June that he did not see a recovery in global tyre markets before mid-to end-2010.
In February, when the group presented full year results, Mr Rollier had said tyre markets would begin to firm in the second half as replacement market inventories were replenished and business activity began to recover.
The group, which has had to cut working hours and production to cope with the sales slump, would maintain its efforts in the months ahead, but "the decline in raw material prices should support second-half margins," Mr Rollier said.
Michelin, whose competitors include Germany's Continental and Japan's Bridgestone, achieved an operating margin of 4 per cent in the first half, with an operating income before non-recurring items of €282 million against a consensus on a Michelin-conducted poll of €100 million.
Sales were down 13.4 per cent at €7.134 billion in the first half. Six analysts polled by Reuters had expected sales of €7.236 billion on average.
Unit sales fell 23 per cent as tyre demand dropped in all markets except China, Michelin said.
The group reduced its net debt by 10.7 per cent to €3.818 billion at the end of the first half.
Reuters
